Tag Archives: credit score

You get it: higher score good, lower score bad. So simple a caveman can understand it. Do the things to make your score go up, you’re fine, right? That’s a good start, but not the whole story. There’s no way to truly “improve credit score instantly.” And, as we said last time, before making drastic changes to how you manage your finances you should probably talk to a professional.

The fastest way to improve your credit score is to ritually follow these steps and reminders, in conjunction with talking to a professional. Each individual has a different situation and set of circumstances, and the plan of action might be heeded differently for each person:

Being late with payments can drop your score. This one is obvious, but it is important enough to bear repeating.

Using more of your available credit can lower your score. The less available unused credit you have the worse the effect on your credit score.

Closing existing or revolving accounts will usually leave you with less unused credit and this can hurt your FICO score.

When you seek new credit accounts, your credit will be checked, which can hurt your credit score. Remember this if you are seeking additional credit in order to have more unused credit available. (this is one example of why talking to a professional is important)

Debts owed because of a court judgment, tax lien, etc., carry an additional negative penalty, especially if they are recent.

Having one or more newly opened consumer finance credit accounts could hurt your score. If you don’t know what this is, you probably don’t have one.

Filing for bankruptcy. This one is pretty complicated, talk to a bankruptcy attorney for more information.

Part of understanding your credit score is properly having your credit score explained. What is your credit score designed to accomplish and what sorts of things go into your credit history?

The free credit scores without membership fees or or other charges are used to inform banks and others who make loans of the likely amount of risk that a given person asking for a loan will be able to pay the loan back. This is done by looking at a person’s financial history.

The following information is what the banks, etc., look at – it is not an exact formula, but the rough numbers are according to FICO:

35%: Payment history including payments on bills, such as a mortgage, credit card or automobile loan.

30%: How much of the credit you have available are you using compared to how much you aren’t using (this is called credit utilization).

15%: The length of your credit history.

10%: The number of types of credit you have used.

10%: Recent searches for your credit score or credit report.

Looking over the list of things that affect your credit, the good news is that you have a lot of control over whether your credit score is good or bad. In the next few articles, we’ll talk specifically about what makes your credit score go up and what makes it go down.